Financial common sense in today's world

Moving back to Japan!

After almost 3 years in India, it looks like I will be heading back to Japan! I am super excited!

Indeed, life in India has not been much fun…

From the work side of life, it was actually pretty good. The job was really interesting, I got to work with a great boss (that I knew from several years back in Japan), on a great project, building a new Financial control platform to service the other entities of the group world-wide. I got to build and train my whole team from scratch and pretty much setup up the whole thing, with the help of IT, HR, Admin, Legal teams etc. A great experience I hope I will be able to convert in a better position.

From the personal side, my wife lost her job in Japan and was not allowed to work in India (with a dependant visa it is not possible to work in India). Life there was pretty boring due to the heavy traffic everywhere (whatever you do takes HOURS), pollution made us sick during the winter and during summer… you get 4 months a non-stop rain during monsoon… I could not do much sport due to various local circumstances (and gained 7-8kg in 3 years…). We actually decided early during the stay that if it was not possible to do anything as there is nothing available in the first place, we might as well have babies (we would not have done much with babies in Japan anyway). First one was born 10 months after arriving and second one less than 2 months ago, Mission accomplished!

Overall, financially over the 3 years my India stay was a wash, compared with what staying in Japan would have been:

On the plus side:

Did not get a raise, but my apartment rental was paid, the equivalent of a ~20% raise.

Got pretty good bonuses.

The babies delivery were covered by the great health insurance we had as expat’ (each delivery may have cost us 500000 yen each otherwise), but at the same time we still beneficiated from my Japanese contract and health insurance, bringing us ~500000 yen for each delivery).

There was so little to do we ended up saving money because of that… Not fully a plus but well.

On the minus side:

My wife lost her job (with babies she would not have been able to work in Japan, but she still would have gotten some revenues)

We could not buy a place to live, and had to fork a huge rent amount every month. It was paid by my company, but that did not even cover my wife loss of income.

We had additional expenses like car, driver etc. that really were not optional here (far too dangerous to cycle here for example, and cycling in suits during the monsoon is a big no-no).

Once we are back, I hope to optimize my savings a bit more. I am quite sure I can spend less and be happier in Japan, but the remaining savings at the end of the month may still take some sort of a hit, as my salary will be back to what it was 6 years ago to start with (without apartment this time), and I will have 2 babies, making it difficult for my wife to work (kindergarten are almost impossible to get into in Japan, unless both parents work… But you need to have a kindergarten ready to actually start working…). Still, we should be able to be far more efficient in our spending thanks to tricks I mentioned here.

Worse case scenario, if we opt for leaving a bit far from work, is that I will commute (transport being paid by my company). That will save a huge amount on the car/driver.

If we spend a bit more on rent, I can then consider cycling to work (free exercise and free money, as my company will still pay me the commute ticket, tax free). I will have other savings like less train cost during weekends, more friends visits (meaning less eating out) etc.

The fact is that in my company today, I can elect to have my rent withdrawn from my salary directly, and it becomes tax free (~95% of the rent becomes tax free to be precise). That is a huge deal since my marginal tax rate will be I think 43% (income tax plus local tax), thanks to my salary and the investment properties I have in Japan. Spending more on the rent (before-tax money) to save on other expenses (after tax money) can be made really efficient that way.

Possibility to start an alternate business (Yoga, kindergarten for my wife, more real estate for me), allowing interesting tax optimization.

I am also looking for opportunities out of my company, as it is likely, if I can find something well suited to my profile and experience, that I can get a 30-40% raise (my salary is the same as I had when I had half the experience as I have today, due to my expat’ stint).

My saving rate (compared to my salary only, excluding other investments) I estimate at around 30-33% if I do not change my income at all and my wife does not work. If I can do that, I should be able to be financially independent in about 10years.

That being said, I would like to bring that to 50%+, thanks to a bit of extra savings and more income. If I can do that, assuming once we have enough savings we move out of Tokyo (Chiba, Izu looks nice, if you have other ideas of cheap country side areas with beaches I am interested), we can be independent in 5 years! After that, it is beach, gardening and Air BnB galore, I really look forward to receive lots of foreigner and introduce them to country side Japan. We will have a blast!

If I can make reliable income on FX trading (2016 was quite good!), I can shorten the deadline significantly, but that would not be riskless at all and I am not sure I want to base my financial independence on that.

Somehow I will need to squeeze 1-2 years of French school for my daughter somewhere as I really want her to speak French (once she does, it should be easy for her little brother to pick it up as well). I would like to avoid the “official” French school at it runs at 3~3.5millions JPY/year all inclusive, which is a totally crazy amount for elementary school.

Ideally I would like to setup some sort of classes during the weekend with the other French/Japanese couples having children I know shortly. We would gather together most weekends (fun!), pay a private teacher and share the costs (or more likely at that age, take turns to teach ^^).